Maybe GI Actuaries Got It Right All Along: A Life Actuary
The last few decades have seen an evolution in the retirement fund industry in South Africa. In addition to the shift from defined benefit to defined contribution retirement saving structures, there are an increasing number of funds seeking valuation exemption and many employers are forgoing stand-alone funds in favour of participation in their “umbrella-type” counterparts. Although aspects of this evolution can be seen as innovative change, little emphasis has been placed on the actual and potential impact that these changes have on retiring members’ outcomes. National statistics suggest that the vast majority of retirees in the current environment are retiring with grossly inadequate levels of income.
Historically, the management of employee benefits – particularly for retirement – has been seen as an area in which actuaries play a vital role. It is evident however that the evolution of the retirement fund industry has been accompanied by a growing perception that actuaries have a limited role to play therein. This suggests that variations in structure and design of retirement savings vehicles diminishes the importance of the end goal: adequate post-retirement income levels. In reality, the post-retirement liability persists whether it is explicitly identified or not. The need to quantify this liability and manage the pathway to meeting the end goal requires skills that only an actuary can provide.
The ongoing role of the actuary in retirement fund environment, no matter the structure, has been brought to the forefront in meetings of the Retirement Matters Committee. In this spirit, the committee has drafted professional guidance to enhance the role that actuaries can play in the current employee benefits environment. The professional guidance aims to provide direction to actuaries in the utilisation of their actuarial skill set to improve the retirement outcomes for members in defined contribution retirement arrangements.
This presentation will discuss the points made in the professional guidance note as drafted. The evolution of the retirement fund environment and the implications thereof will also be covered.